Thailand’s Kra Canal and the Belt and Road Initiative

Have you heard about Thailand’s Kra Canal and the Belt and Road Initiative?

After demurring for years, Thai Prime Minister General Prayut Chan-ocha last week ordered national planning and security agencies to look into building a possible canal across the narrow Isthmus of Kra in the kingdom’s southern region. Indeed, the order came a month after China’s ambassador to Thailand confirmed the canal as part of his country’s Belt and Road Initiative (BRI), Beijing’s US$1 trillion flagship project for global economic expansion. Although the BRI — including a “Maritime Silk Road” — is a logical undertaking for the most relentless economy in history, as it cuts precious days from the travel time for oil tankers arriving from Africa and the Middle East and avoids the Malacca Straits, which the US Navy regularly practices blocking. The director of the Panama Canal was in Bangkok this week telling Thais they should go ahead and build it.

Thailand’s Kra Canal has been coming for a long time, now China’s Belt and Road Initiative, BRI, is bringing it to life. Yes, you read right, Thailand’s Kra Canal and the Belt and Road Initiative are a thing..

From Prince Prisdang’s Files on His Diplomatic Activities in Europe from 1880-1886:

“Both England and France showed great interest in cutting the canal through the Isthmus of Kra to shorten the sea route to the Far East and save shipping expenses. M. Grehan, the Thai consul in Paris, came out openly in his letters to the Thai government in support the French endeavours. Understandably, he accused Mason, the Thai consul in London, of involvement with an English firm. King Chula-longkorn however had to act diplomatically and prudently when the two big powers, England and France, were concerned in the Kra Canal. He could not favour one in case he might injure the pride of the other.” [The white star on the map marks the Kra Isthmus. The red star is Singapore, at the highly strategic entrance to the Strait of Malacca. (Map/China Times)].

The narrow Kra Isthmus was a source of great wealth for Thailand for centuries. Indian and Persian goods were carried across the isthmus and re-exported to SE Asia and China. And vice-versa. That narrow isthmus, which bypassed pirates, was a wonderful money-spinner that made Thailand one of the premier trading nations in the world. Now history seems about to repeat itself.

Later, in the 19th century when canals were the rage, the great powers of the day, England and France, showed great interest in cutting the canal through the Isthmus of Kra to shorten the sea route to the Far East and save shipping expenses. The book adds: King Chulalongkorn had to act diplomatically and prudently when the two big powers, England and France, were concerned in the Kra Canal. He could not favor one in case he might injure the pride of the other. Today it is the USA that’s trying to prevent its construction. Why? Well…

The plan is one of the most ambitious and transformational infrastructure megaprojects ever contemplated in Asia — construction of a $28 billion, 135km shipping canal across Thailand’s narrow Isthmus of Kra to link the Pacific and Indian oceans. Fisherman Sittichai Bohmung recalls the time last year when a bunch of retired generals from Bangkok and businessmen from China surveyed the Kra Canal route, “I didn’t believe it when I heard they wanted to see me. Someone had told them how well I know this coastline and they hired me to take them out in my boat and be their guide. They even asked for my opinion about their plan.” An Asian equivalent of the Suez or Panama canals, the so-called Kra Canal would slice through the Malay peninsula some 800km south of Bangkok and about 200km north of Thailand’s border with Malaysia, linking the Gulf of Thailand and the Andaman Sea at roughly the same latitude as the resort island of Phuket. The canal would bypass the narrow, traffic-choked, piracy-prone and strategically sensitive Malacca Strait, the world’s busiest trade route, which links China, Japan and other East Asian nations with the oil fields of the Middle East and major markets in Europe, Africa and India. The distance saved for ships passing between the Indian and Pacific Oceans would be at least 1,200km, or two to three days sailing time. Equally significantly, it would provide an alternative route to a strait through which a record 84,000 vessels passed last year — a figure that is rapidly approaching capacity.

“If the right interest groups were aligned, could this get done? Of course,” said Jonathan Hillman, a global infrastructure expert and director of the Reconnecting Asia Project at the Washington-based Center for Strategic and International Studies. “It could be a game-changer in the region, strategically and economically.”

According to a Thai-language book published by the canal’s promoters, the waterway alone would cost $28 billion. A surrounding special economic zone would cost another $22 billion, which would fund related industries and infrastructure, including new cities and artificial offshore islands built with excavated earth. The combined project would eventually create some 2.5 million jobs according to the promotional book — enough to employ one in four of the roughly 10 million inhabitants of southern Thailand. Locals who would lose land to canal construction would be paid compensation based on a percentage of the tolls levied on ships using the canal.

A successful canal operation could even lead to a major realignment of economic power in Southeast Asia because shortcutting the Strait of Malacca would also bypass Singapore, the richest economy in ASEAN and one of the region’s great trading hubs. By canal supporters’ estimates, 30% of Malacca Strait shipping could move north to use the Kra Canal. The canal would also attract vessels too big to pass through the strait, which are presently forced to take much longer routes to and from East Asia via the Sunda or Lombok straits. Using the Kra Canal instead of the Lombok Strait would save 3,500km and six days’ sailing time.

Still, the project faces serious obstacles, including exclusion from Prayuth’s list of priorities. “Those who want to initiate the Kra Canal have to push forward the project in the next government,” he said last year. “I won’t do it now because I have a pile of urgent work to finish.”

Public support for the canal is also far from unanimous, with proponents and opponents arguing about the security implications of the waterway, which would divide most of the overwhelmingly Buddhist country from three insurgency-plagued and largely Muslim southern provinces.

A canal could also fuel tensions within Asean because it would take business from other regional shipping hubs. “The challenge is that it would likely benefit Thailand and cut into Singapore’s incumbent advantage,” CSIS’s Hillman said.

Then there are the technical challenges of such a megaproject. Although the Isthmus of Kra is just 45km wide at its narrowest point, the proposed canal route would be three times that distance to avoid inland mountain ranges. That would make the Kra Canal 58km longer than its counterpart in Panama.

Historically, the canal has often seemed to be more a mirage than a vision. First proposed 350 years ago by Thai royalty, it was stymied repeatedly by political, financial and technical obstacles. As recently as two years ago, the project became shrouded in confusion when two little-known companies from Thailand and China announced they had signed a memorandum of understanding to build it, only for their respective governments to deny that a deal had taken place.

Serious players

Nicholas Farrelly, a Southeast Asia expert at the Australian National University’s Coral Bell School of Asia Pacific Affairs, is skeptical that Thailand has the capacity to strike a deal, raise the necessary capital and begin excavations in the near future. However, he does not rule out the possibility of the retired generals eventually winning their campaign, especially as the junta needs to boost the country’s still-fragile economy.

“These old warhorses are indicating to their proteges that this is something that needs putting on the agenda,” Farrelly said. “Although they are somewhat estranged from direct executive authority, they are serious players. At some stage, I think it is likely to happen.”

Technically, the challenges are also surmountable, according to Harald Wagner, a former World Bank consultant who has worked on canals in Europe and now teaches civil engineering at the King Mongkut Institute. Unlike the Panama Canal, the Kra route would be at sea level and require no elaborate system of locks. “Technically, it is easy to solve,” he said.

As well as using their clout within Bangkok’s corridors of power, the canal’s backers have also embarked on a highly-organized grass roots campaign to win support among Southern Thais.

The canal would directly affect some 60,000 people in 90 villages and the Thai Canal Association has set up local committees along the proposed route to sign up supporters, spell out compensation proposals and explain the job opportunities a canal would create.

To further encourage locals, the canal association has hired one of Thailand’s top environmental experts, Chumphon Sukkasean, a former ASEAN wildlife protection chief, as a key adviser. Chumphon said the proposed western entrance to the canal had been moved slightly on the recommendation of residents so that approaching vessels would not sail close to coral formations and the habitat of endangered dugong sea mammals.

The estuary of the remote Galasai River on the Andaman Sea would become the entrance to the Kra Canal. (Photo by William Mellor)

The canal’s entrance would be at the estuary of the Galasai River, which forms the border between Krabi and Trang provinces on Thailand’s Andaman Sea coast. Although within about 100km of the beaches, limestone karst formations and coral reefs that lure international tourists to Krabi, Phuket and the Phi-phi islands, this part of Thailand is underdeveloped.

As it heads eastward, the canal route detours through a gap in the isthmus’s hilly spine and bypasses the sensitive Thaleh Noi bird sanctuary wetland before exiting into the Gulf of Thailand on a lonely beach midway between the cities of Nakhon Sri Thammarat and Songkhla.

In these parts, many locals eke a living from fishing and farming, selling their produce at traditional floating markets, or work on rubber plantations. Annual family incomes can be as low as 50,000 baht ($1,500), according to village leaders. Between 75% and 98% of the population of these communities want the canal’s economic benefits, these local leaders told the Nikkei Asian Review.

In mid-June, villagers at Taborn, a district of 8,000 people straddling the canal’s proposed eastern exit point, met at their community hall to be blessed by saffron-robed Buddhist monks and to discuss their future. Asked whether they supported the canal’s construction, the audience responded with a sea of raised hands.

A village meeting at Taborn shows unanimous support for construction of the Kra Canal even though it would run through the district (Photo by William Mellor)

“The people here aren’t worried about the canal being built,” district headman Pramot Saengarun, 63, said later, as he squatted under a shade tree. “What they are more worried about is that it won’t happen.”

This month China and Thailand reportedly agreed in principle on a canal through the Isthmus, the narrowest part of the Malay peninsula. The project, in the pipeline for 130 years, may soon start construction on a canal that will bypass the Strait of Malacca and the US Navy.

It’ll be part of the New Silk Road Economic Belt and 21st Century Maritime Silk Road (BRI). The 100 kilometer canal will allow ships to pass from the Pacific into the Indian Ocean and cut 1,200 kilometers and 2 days sailing off the current route. It will be integrated with the new railroad running from Singapore to Beijing and Moscow. The project will take an estimated 10 years to complete and cost US$30 billion. It will be a 2-way, 25m-deep canal 400 m wide and 102 km long. By contrast, the Panama Canal is 15 m deep and measures 304 m at its widest point.

80% of China’s oil comes from the Middle East and Africa and 80% of this must pass through the Malacca Strait, where pirates and the US Navy pose a constant threat to China’s oil supply. The project will reduce costs and boost the development of Hong Kong and mainland ports. Singapore will have something to say about that, too.

Asian military analyst Huang Dong said that the canal will also improve the PLA Navy’s ability to respond to international incidents (the PLA Navy recently evacuated citizens of several countries from Yemen after the civil war there erupted).

Since Chinese companies will participate in the project China will probably be granted some level of authority over the canal and may even be able to negotiate to refuse passage through the canal to warships from certain countries, increasing China’s influence in Southeast Asia.

The Belt and Road Initiative, BRI, is bearing fruit–literally. A new, regular road cargo service between southwest Bangkok and China’s Chongqing Municipality (that’s their freeway flyover in the picture) started operations this month.
Chongqing is the terminus for three routes to the Association of Southeast Asian Nations (ASEAN): the eastern route, to Hanoi, Vietnam, is in operation and the third, western, route to Yangon, Myanmar, will open at the end of this year or the beginning of next. The cargo service will carry fruit, grain, timber and other agricultural products from Thailand to Chongqing and return with electronics and machinery. Alas, travel by private car from Thailand is still semi-impossible, though travel groups have begun driving from China to Thailand–thanks to China’s effective diplomacy–though the Chinese convoys must have Thai guides from the Thai border. Work on the railroad has started at both ends and should be completed in 2021.

Roads Add to the Belt and Road Initiative (BRI)

The Belt and Road Initiative, BRI, is bearing fruit–literally. A new, regular road cargo service between southwest Bangkok and China’s Chongqing Municipality (that’s their freeway flyover in the picture) started operations this month.
Chongqing is the terminus for three routes to the Association of Southeast Asian Nations (ASEAN): the eastern route, to Hanoi, Vietnam, is in operation and the third, western, route to Yangon, Myanmar, will open at the end of this year or the beginning of next. The cargo service will carry fruit, grain, timber and other agricultural products from Thailand to Chongqing and return with electronics and machinery. Alas, travel by private car from Thailand is still semi-impossible, though travel groups have begun driving from China to Thailand–thanks to China’s effective diplomacy–though the Chinese convoys must have Thai guides from the Thai border. Work on the railroad has started at both ends and should be completed in 2021.